PEST drivers

Marketing Environment What would you assume to be the key PEST drivers? PEST/STEP is about the macro environment. We should use the finer grained variant of Kotler which details Social into Cultural, Demographic and Natural (the first two probably being very “yielding”). Political Forces Alcohol consume is a threat to public health and should be constrained ??? Market monopolization in Scandinavian and other countries ??? Alcohol taxes in most countries of the world ??? Anti-alcohol campaigns in many countries of the world ??? Alcohol prohibition (e. g. n specific countries, regions or (public) places; in certain acilities like Metros; in Islamic countries; during public events, etc. ) Laws regulating ads, product placement and sponsorship / sales promotion for alcoholic drinks ??? Restrictions for on-/off-premise sales of alcoholic beverages (time, specific events) ??? National legal minimum age for on-premise sales of alcoholic beverages (serving and selling) “Don’t drink and drive” Economic Forces Economic decline in Europe, US, etc. reduces amount available to spend for luxury goods. Alcoholic beverages are no basic food.

However, they are very important for many cultures and come along with many social activities. Alcoholic drinks are sometimes differentiated by the social level of their typical consumers. Change in price, availability and quality of production inputs. Increasingly countries around the world have become more economically interdependent. Free-trade agreements have made the international trade in a more direct and easier fashion, such as European Union (ELI), North American Free Trade Agreement (NAFTA), and World Trade Organization (WTO). Even China has to open its ??”v’irgin alcohol market to the importers from all over the world.

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Social Forces Cultural Forces Since 1979 when Absolut Vodka was introduced in the US-Market, company arketers has been fghting against a number of cultural aspects that makes that competitive market a unique one. From the former idea about “the cheaper vodka, the best”, to Who would buy a totally unknown vodka from Sweden?. US is the most competitive market for premium spirits, but facing a trend change in alcohol consumption that have decreased by 20 percent as result of the tendency towards a healthy live and changing lifestyle across the Country.

Absolut breached into the American market by creating a luxury image for a product a product that compliments social functions, as a premium icon that provides a tatus and accomplish with current trend and thinking on drink “less but better”. Today, those specific US cultural aspects matches with the priorities that company promotes across the world (Promote Responsible Drinking – Respect our environment and share cultures).

Having a drink is (mostly) a group task; it involves going to a bar, attending an event or inviting people for a party, meeting other people, communicating, partying, etc. Such activities are mostly seen as leisure time activities which most people connect positive feelings to. Image of Vodka seems to have improved from an original perception of a lower-class, ndifferentiated and unprestigious drink. “Drinking” (specifically alcohol) is not generally a highly rated activity among most cultures. Being bound to traditions is highly rated by many people.

Basic things remain the same: city of origin, raw materials, creation process, bottle design, emphasize on creativity; others change: drinking tastes and flavours, collaborators Demographic Forces Population decline in Europe, population growth elsewhere Changing age structure of the population ??? More younger people in emerging economies ??? Aging population in developed countries (with exception US) Changing family/household structure ?? Increasing number of single households ??? Increasing number of households with no children Increasing diversity Natural Forces The ingredients, their quality and origin, the product’s process of creation and its relationship to nature are very important to most consumers of food or similar products. Increasing raw material costs for food (mainly grain, potatoes, molasses) in concurrency to energy or fuel production. Social Responsibility The world has put more social responsibility to the alcoholic firms. Several social and environmental organizations have advocated consumers to use the products caring or the environment and minimizing the impact on the environment. Vodka manufacturers, in this context, are required to deliver their marketing strategies and products reflecting this global environmental trend.

Technological Forces Technological developments are having profound impact on all aspects of the marketing practice, including marketing communication (spirits ads on the Net or via research (monitoring supermarket purchasing with scanners or Internet activity with digital ??”cookies). It implies that vodka manufacturers need to catch up the e- commerce development. Things that make the product distinguishable (e. . production techniques which cheapen the creation of spectacular design or “gadgets” Advertisment techniques/channels (e. g. internet, smartphone apps) Things that make the product taste/act differently (e. g. new tastes, new add-ons) How do they present as opportunities or threats? Strengths: It is a Premium category Vodka which offers a unique taste.

Iconic brand: ??? leading luxury brand in the world with high brand recall and recognition ??? exclusive and most powerful advertising campaign of all spirits brands (increased the sale of ABSOLUT Vodka by 14,900% over 1 5 years and has won over 350 awards) ??? powerful mage of the company closely connected with strong associations to art and chic ??? world class reputation ??? established brand communication and positioning ??? distinctive Image of ABSOLUT make consumers looks in trend ??? attractive packaging makes ABSOLUT and ideal product for display ??? Ice Bar which is designed by international artists & sculptors and presents in major cities like Stockholm, London, Tokyo. Absolut flavours: ??? market leader in flavoured vodka segment ??? offering 12 different flavoured vodka which cater to all types of drinkers ??? unique tastes with superior quality Unique production methodology: ?? revolutionary distillation process ??? One Source concept (all ABSOLUT Vodka is produced in one place without license manufacturing) Digital Age: ??? The ABSOLUT website is a hit amongst the masses. ??? dedicated ABSOLUT Facebook and Twitter page Sponsorships: ??? has tie-ups with major events & programmes.

Opportunities Increased standard of living in developing countries: ??? Absolut is present in 126 markets, but further development as to deeper representation and promotion is possible to gain leading positions on local markets ??? the international market is 4 times the size of US market ??? developing countries has ess restrictions or trade barriers. Doubling of plant capacity Expanding channels of Advertising campaign (Internet and TV) Weaknesses Mass marketing: ??? Premium brand may impact on buying decision for low-income consumers Controversial campaigns: ??? Controversial Marketing campaigns in the past have dented the image to some ??? almost complete reliance of ABSOLUT brand on its image.

Liquor industry agents have nothing distinctive concerning quality or taste of the product to offer except the image ??? Usage occasion of vodka, much like any other alcoholic drinks, usually happens at Night-clubs and in private premises Threats Rising labor costs Stringent advertising regulations Affects of alcohol government legislation: ??? Increases in alcohol duties (Rise in excise taxes) and regulations – with increased concerns over the health (alcohol abuse) Competition: ??? emergence of new powerful competitors (Gray Goose, Ketel One, Belvedere) ??? Pressure from both more expensive brands of the luxury liquor segment, and from less expensive brands such as domestic Smirnoff. ??? active sage of TV, radio and other advertising means by the competitors in the industry. ??? competitors expanding into flavoured vodka segment What are the strategic implications? Nothing yet.